Importance of Medical Test in Insurance

We generally loathe the idea of having to undergo medical tests. So if an insurance company urges you to undergo certain medical tests before approval, we shun the idea of investing in that particular company.

Another situation is when we fall for false advertisements that most insurance companies try to lure you with, which is insurance without a medical test.

Somehow the possibility of not having to undergo a medical test just to buy a term plan seems much favorable.

But, are insurance policies without medical tests worth it? Will it pose a problem later and create a sticky situation that you can do nothing about?

Let’s first understand how beneficial it is to you, if you opt for an insurance policy without a pre-medical requirement. Here are a few assumptions;

Policy approval time is quicker

The one seeking the policy saves time, as they don’t have to travel to the predefined medical centre.

If the policyholder suffers from an existing medical condition, not having to undergo a medical test would mean that they do not have to pay a higher premium on insurance.

Why do insurance companies insist on a pre-medical test before policy approval?

Generally the onus of checking the risk potential of the policyholder rests with the underwriting team. By asking you to do a medical test or checkup, the insurance company eliminates the task of the underwriting team.

If an insurance company offers medical test at discounted rates, there are high chances that they could charge you a higher premium on your policy.

This is because the premium payment is based on the perceived health risk that the policyholder is supposedly exposed to. In case there are certain tests missing, it is assumed that the policyholder is trying to hide certain medical conditions, and hence is charged a higher premium rate.

On hindsight, if you do a complete medical test as stated by the insurance company, there is possibility you only pay a Preferred Rate if your tests determine you are healthy.

Not getting tested would mean you would attract the following rates predefined by most insurance companies.

Standard Rate

Sub Standard Rate

Smoker Rate

Preferred Rate is a lower premium rate offered to the policyholder who is deemed healthy though medical checkups and tests as requested by the insurance company.

Buying an insurance policy that does not require medical tests done means that you undertake a Declaration of Good Health. With this statement especially as a policyholder, the disclosure onus lies on you.

In times of medical insurance requirement if it is found that you have an existing medical issue not disclosed your policy claim can be rejected on grounds of the nondisclosure of medical facts.

By not disclosing medical, Material facts about you, the insurer has no decision power to insure you.

There has however been a slight change since Oct 2015, especially if a claim made on a policy existing for over 3 years. In such cases the insurer has to pay the claim made by the insured.

When you apply for an insurance policy the underwriting team checks your risk factors as well as your Human Life Value.

The amount is calculated on your financial and medical underwriting. If your policy is devoid of these processes there is a chance that your life cover is not of the value you want.

The deducted amount means that you are underinsured, something that no policyholder would like, especially in times when they are in dire need of financial support.

This again points to the fact that getting a medical test done is necessary to ward of any chances of being underinsured.

A low risk cover would even disregard the fact that you are young and very healthy, the only cover you might receive is a Rs.5 Lakh cover.

If the policyholder does a medical test and submits their medical test results, they could receive a higher cover as per your requirement.

A snapshot of your health result is therefore essential for you as a policyholder and the insurance company. For the policyholder it allows for lesser chances of rejection on claim of policy, and getting a reasonable risk cover.

The verdict is in favour of medical tests your insurance company asks you to undergo. Moreover the policies that are exempt from medical tests attract a higher premium amount.

It is therefore advisable to thoroughly evaluate non-medical test polices before you buy them. Buy them only if it suits your need and your budget.

We suggest you choose a policy that wants you to undergo medical tests. The tests are nominal, and a full report includes fasting blood sugar, blood pressure test, blood count, ECG and sometimes it could include liver tests and kidney tests. The tests are not much of a hassle and will only help the policyholder in the long run.